DOING BUSINESS IN... 2021 - IRELAND PHILIP TULLY, EMMA DOHERTY, GERALDINE CARR, SHANE HOGAN, KATE MCKENNA AND ANNE-MARIE BOHAN MATHESON
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Definitive global law guides offering comparative analysis from top-ranked lawyers Doing Business In... 2021 Ireland Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan Matheson practiceguides.chambers.com
IRELAND
Law and Practice
Contributed by:
Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan,
Kate McKenna and Anne-Marie Bohan
Matheson see p.24
CONTENTS
1. Legal System p.3 6. Competition Law p.15
1.1 Legal System and Judicial Order p.3 6.1 Merger Control Notification p.15
6.2 Merger Control Procedure p.16
2. Restrictions to Foreign Investments p.3
6.3 Cartels p.16
2.1 Approval of Foreign Investments p.3
6.4 Abuse of Dominant Position p.17
2.2 Procedure and Sanctions in the Event of Non-
compliance p.4 7. Intellectual Property p.17
2.3 Commitments Required from Foreign Investors p.4 7.1 Patents p.17
2.4 Right to Appeal p.4 7.2 Trade Marks p.18
3. Corporate Vehicles p.4 7.3 Industrial Design p.19
3.1 Most Common Forms of Legal Entities p.4 7.4 Copyright p.20
3.2 Incorporation Process p.5 7.5 Others p.20
3.3 Ongoing Reporting and Disclosure Obligations p.5 8. Data Protection p.21
3.4 Management Structures p.5 8.1 Applicable Regulations p.21
3.5 Directors’, Officers’ and Shareholders’ Liability p.6 8.2 Geographical Scope p.21
4. Employment Law p.6 8.3 Role and Authority of the Data Protection
Agency p.22
4.1 Nature of Applicable Regulations p.6
4.2 Characteristics of Employment Contracts p.7 9. Looking Forward p.22
4.3 Working Time p.7 9.1 Upcoming Legal Reforms p.22
4.4 Termination of Employment Contracts p.8
4.5 Employee Representations p.9
5. Tax Law p.10
5.1 Taxes Applicable to Employees/Employers p.10
5.2 Taxes Applicable to Businesses p.11
5.3 Available Tax Credits/Incentives p.12
5.4 Tax Consolidation p.13
5.5 Thin Capitalisation Rules and Other Limitations p.13
5.6 Transfer Pricing p.14
5.7 Anti-evasion Rules p.14
2
IRELAND Law and Practice
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
1. LEGAL SYSTEM EU Investment Screening Regulation (Regulation
(EU) 2019/452, the “FDI Screening Regulation”)
1.1 Legal System and Judicial Order becoming effective in October 2020. The FDI
The judicial system in Ireland is established by Screening Regulation sets out rules which will
the Constitution, the principal courts being the enable scrutiny of investment ventures pursued
district courts and circuit courts (with limited within the EU by third countries (non-EU mem-
jurisdiction), the High Court (with unlimited juris- bers), with a view to maintaining public order
diction in civil and criminal matters), the Court and security.
of Appeal (with appellate jurisdiction) and the
Supreme Court (which usually exercises final Individual member states retain discretion as
appellate jurisdiction only). The judiciary is inde- to whether they implement a screening system
pendent of the legislature and the executive. but any such system must then meet basic cri-
teria concerning confidentiality, transparency
Ireland is a member state of the EU and the Unit- and the application of review timeframes. Ire-
ed Nations. The Irish legal system is similar in land has taken its first steps in this direction by
many respects to that of the UK and the US. Irish establishing an “FDI Screening Unit” within the
law is based upon common law, statute and the Department of Enterprise, Trade and Employ-
Constitution of Ireland. The EU also represents ment and has conducted a public consultation
an important source of Irish law and decisions on prospective investment screening legislation.
of the Court of Justice of the European Union
(CJEU) exercise significant influence over Irish The Investment Screening Bill
law. The Department is also currently finalising draft
legislation for the possible introduction of a new
Following Brexit, Ireland is the only EU common foreign investment or FDI screening regime, as
law jurisdiction and this makes Ireland an attrac- mandated by the FDI Screening Regulation and
tive jurisdiction in which to establish operations has established an information sharing and co-
and litigate international commercial disputes. operation framework across EU member state
Together with other factors, such as the ease authorities. The legislation establishing the new
of doing business in Ireland, this makes Ireland Irish regime, the “Investment Screening Bill”,
one of the best destinations for foreign direct was expected to be adopted as early as the end
investment. of H1 2021, however this has been delayed until
H2 2021 or beyond. While the exact scope of the
new FDI regime and whether it will give rise to
2. RESTRICTIONS TO additional mandatory notification requirements
FOREIGN INVESTMENTS in certain instances remains unclear until the
draft legislation is published, the Competition
2.1 Approval of Foreign Investments and Consumer Protection Commission (CCPC)
The FDI Screening Regulation is likely to have a role in administering the ini-
Currently, Ireland has no foreign investment tial review under the new FDI regime, alongside
screening regime but the government has sig- the general merger control and media merger
nalled its intention to introduce one with the regimes.
inclusion of the Investment Screening Bill on
recent legislative programmes. This develop- In the meantime, Ireland is subject to the infor-
ment takes place against the backdrop of the mation-sharing mechanisms with other member
3
Law and Practice IRELAND
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
states and the EU Commission as set out in the Designated Activity Company (DAC)
FDI Screening Regulation. The DAC is an alternative form of private limited
company. A key distinction between a DAC and
2.2 Procedure and Sanctions in the an LTD is the existence of an objects clause in
Event of Non-compliance the DAC constitution. A DAC may be a suitable
There are currently no general requirements vehicle where an objects clause is needed (eg, to
under Irish law for foreign investors to obtain restrict the corporate capacity of a joint-venture
investment approval. vehicle) or for companies listing debt securities
on a stock exchange.
2.3 Commitments Required from
Foreign Investors Unlimited Company
Irish authorities currently impose no specific The Companies Act recognises three distinct
commitments on foreign investors in relation to types of unlimited company:
their investments.
• the private unlimited company with a share
2.4 Right to Appeal capital (ULC);
In general terms, Irish authorities currently can- • the public unlimited company with a share
not block foreign investment, so there is no need capital (PUC); and
for recourse to the various appeal mechanisms • the public unlimited company without a share
available under Irish law. capital (whose liabilities are guaranteed by its
members) (PULC).
3 . C O R P O R AT E V E H I C L E S Members of an unlimited company may be held
liable on an unlimited basis for the debts of the
3.1 Most Common Forms of Legal company in the event of it entering insolvent liq-
Entities uidation. Like an LTD, ULCs may not offer for
The Companies Act 2014 (the “Companies Act”) sale or list any new securities, but a PUC and
provides for the creation of various types of cor- PULC may list debt securities.
porate vehicles in Ireland. A company of any type
may be incorporated with a single shareholder. Public Limited Company (PLC)
The key distinction between PLCs and private
Company Limited by Shares (LTD) companies is that only PLCs may list their shares
The LTD is the model form of private company on a stock exchange and offer them to the pub-
limited by shares and is the most common form lic. A Societas Europaea (SE), the European
of corporate vehicle used by foreign investors. model company, is regarded as a PLC under the
The LTD has the same unlimited legal capacity Companies Act. It must have a minimum issued
as an individual. It has a one-document con- share capital of EUR25,000. There is a general
stitution and its internal regulations are set out prohibition on the giving of financial assistance
in simplified form in that constitution. An LTD by a PLC in connection with the acquisition of
is prohibited from offering securities (equity or shares in itself or its holding company.
debt) to the public.
Guarantee Company (CLG)
A CLG does not have a share capital and is a
popular type of company for charities, sports
4
IRELAND Law and Practice
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
and social clubs, and property management to fewer public disclosures and more relaxed
companies. The members’ liability is limited to reporting requirements.
such amount as they undertake in the constitu-
tion of the company to contribute to the assets Directors’ Additional Disclosures
of the CLG in the event of its winding-up. A CLG Directors may need to make additional disclo-
has a two-document constitution, consisting of sures to the company if, for example, they hold
a memorandum and articles of association. shares representing more than 1% of the com-
pany’s share capital. Directors of companies with
3.2 Incorporation Process assets exceeding EUR12.5 million and turnover
To incorporate a company in Ireland, certain exceeding EUR25 million are also required to
documents, including the company’s constitu- make an additional prescribed form of compli-
tion, must be filed with the Companies Regis- ance statement in their directors’ report.
tration Office (CRO). Incorporation papers must
contain the company name, registered office, Internal Register on Ultimate Beneficial
directors’ and secretary’s details, subscriber Owner
details, the company’s principal activity and the Most Irish companies must maintain internal
place in Ireland where it proposes to carry on registers on individuals considered to be their
that activity. The incorporation form includes a ultimate beneficial owner. The EU (Anti-Money
declaration that the requirements of the Compa- Laundering: Beneficial Ownership of Corporate
nies Act have been complied with. Entities) Regulations 2019 also require entities
to file their beneficial ownership details on a
Under an express incorporation scheme, a com- central beneficial ownership register which is
pany can be incorporated within five working publicly accessible. Where the company has no
days. Otherwise, it may take two to three weeks beneficial owner or the beneficial owner cannot
to incorporate a company. On incorporation, the be identified, details of the company’s senior
CRO will issue the company with a certificate managing officials (directors) must be provided.
of incorporation. CRO fees are EUR50 and the
process is completed online. Filings in Regard to Changes
CRO filings must be made in respect of changes
3.3 Ongoing Reporting and Disclosure in the following:
Obligations
Documents Presented at the AGM • company name;
Irish companies must generally present audited • directors or company secretary;
financial statements to the annual general meet- • registered office; and
ing (AGM) and then publicly file a copy with the • share capital or the company constitution.
company’s annual return in the CRO (including
certain disclosures concerning directors’ remu- Details of mortgages or charges made in respect
neration). A directors’ report on the state of of a company must also be filed with the CRO.
affairs of the company and its subsidiaries must
be attached to the balance sheet presented 3.4 Management Structures
before the AGM. For all LTDs and for other com- Irish companies are managed by a single-tier
pany types with one member (other than PLCs), board of directors. All companies, other than
a written procedure is available in place of an LTDs, must have a minimum of two directors.
AGM. Small and micro companies are subject The secretary may be one of the directors of the
5
Law and Practice IRELAND
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
company. An LTD may have one director but, in knowledge and experience which the director
that case, there must be a separate company possesses.
secretary. A body corporate may act as secre-
tary to another company, but not to itself. A body Where a breach of duty by a director is proved,
corporate may not act as a director. they may be required to account to the company
for any personal gain made from the breach and
At least one of the directors of an Irish company to indemnify the company for any loss or dam-
must be a resident of a member state of the age resulting from the breach. Generally, parent
European Economic Area (EEA) unless: companies are not liable for the acts of limited
liability subsidiaries, but they may be liable under
• the company posts a bond to the value of parent company guarantees.
EUR25,000 which, in the event of failure by
the company to pay a fine imposed in respect Directors’ duties are owed (to varying degrees) to
of an offence under company law or a penalty the company, the shareholders, the company’s
under tax legislation, will be used in discharge employees, the company’s creditors and any
of the company’s liability; or appointing shareholder. Directors may be found
• the company holds a certificate from the CRO criminally liable for certain breaches of the Com-
confirming that the company has a real and panies Act and for other offences in areas such
continuous link with one or more economic as environmental, health and safety, and tax law.
activities that are being carried on in Ireland.
Subject to certain limitations in the Companies
3.5 Directors’, Officers’ and Act, a company is permitted, however, to indem-
Shareholders’ Liability nify a director in respect of liability incurred in
Directors’ common law fiduciary duties are codi- defending proceedings, whether civil or crimi-
fied in the Companies Act. A director’s fiduciary nal, in which judgment is given in the director’s
duties under the Companies Act include (but are favour or in which the director is acquitted, or
not limited to) the duty to: where the High Court, in an application for relief,
declares that the director has acted reasonably
• act in good faith in what the directors con- and honestly.
sider to be the interests of the company;
• act in accordance with the company’s con-
stitution and use their powers only for the 4. EMPLOYMENT LAW
purposes allowed by law;
• avoid conflicts of interest between the direc- 4.1 Nature of Applicable Regulations
tor’s duty to the company and their other Employment protection laws in Ireland apply to
interests (including personal interests) unless all employees working in Ireland, irrespective of
the director is released from this duty; and the employee’s nationality.
• exercise the care, skill and diligence which
would be exercised in the same circum- Employment law is primarily governed by:
stances by a reasonable person having both
the knowledge and experience that may • the Constitution of Ireland;
reasonably be expected of a person in the • Irish statutes and EU law;
same position as the director and with the • judicial precedents;
• common law (including contract law);
6
IRELAND Law and Practice
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
• statutory mechanisms put in place by the • the address of the employer;
state to regulate certain sectors, including • the expected duration of the contract, in the
Sectoral Employment Orders (SEOs) which case of a temporary contract, or the end date
require acceptance by the Minister of State if the contract is a fixed-term contract;
at the Department of Enterprise, Trade and • the rate or method of calculation of the
Employment following a recommendation employee’s pay; and
from the Labour Court; • the number of hours the employer reasonably
• collective bargaining agreements; and expects the employee to work per normal
• custom and practice in the workplace and working day and per normal working week.
workplace or industry rules.
The Terms of Employment (Information) Act
The primary legislation regulating employment 1994
relationships include the: Under the Terms of Employment (Information)
Act 1994, all employers are obliged, within two
• Unfair Dismissals Acts 1977 to 2015; months of commencement of employment, to
• Employment Equality Acts 1998 to 2015; provide their employees with a written state-
• Redundancy Payments Acts 1967 to 2014; ment setting out certain fundamental terms of
• National Minimum Wage Act 2000 and the their employment, such as the date of com-
Payment of Wages Act 1991; mencement, place of employment, employer
• Terms of Employment (Information) Acts 1994 and employee details, job title and a description
to 2014; of the nature of the work, expiry date (if relevant),
• Maternity Protection Acts 1994 to 2004 and breakdown of wage calculations, annual leave
other protective leave legislation; and sick pay entitlements and notice require-
• Minimum Notice and Terms of Employment ments. The statement must be signed by both
Acts 1973 to 2005; the employee and the employer. Any change to
• Fixed Term Workers, Part Time Employees the statutory particulars must be notified to the
and Agency Workers Protection Legislation; employee, in writing, within one month.
• Organisation of Working Time Act 1997; and
• European Communities (Protection of 4.3 Working Time
Employees on Transfer of Undertakings) An employer may not permit any employee to
Regulations 2003. work for more than an average of 48 hours per
week, over a particular reference period (usu-
4.2 Characteristics of Employment ally four months). This reference period varies
Contracts depending on the type of employment in ques-
The Employment (Miscellaneous Provisions) tion. Working time should only take account of
Act 2018 time spent working (ie, it should exclude rest and
Under the Employment (Miscellaneous Provi- meal breaks).
sions) Act 2018, employers must notify employ-
ees in writing, within five days of commence- Employees cannot opt out of the 48-hour aver-
ment of employment, of the following core terms age working week. However, there is a particu-
of employment: lar exemption for senior or specialist employees,
who can determine their own working time, such
• the full names of the employer and the that they are not subject to the restriction. The
employee; contracts of such employees should expressly
7Law and Practice IRELAND
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
provide that they are exempt from the 48-hour • the employee being prohibited by law from
average working week. working or continuing to work (eg, not holding
a valid work permit where one is required).
Overtime
Generally speaking, there is no statutory enti- If one of the above cannot be established, there
tlement to overtime under Irish law, or to pay- must be some other substantial grounds to jus-
ment for overtime. Employees will only be enti- tify the dismissal.
tled to overtime pay if such an entitlement is
contained in their employment contract or has Ending a Contract of Employment
been established by custom and practice in Where an employee or an employer wishes to
the employment concerned. However, employ- end a contract of employment, minimum periods
ers that require employees to work on Sundays of notice apply where an employee has been
are required to compensate them for doing so, in continuous service for at least 13 weeks.
whether in terms of paying a “Sunday premium” The notice period to be given by an employer
or specifically taking into account the fact that depends on the employee’s length of service.
they may be required to work on a Sunday in It varies from one week, applicable where an
calculating the rate of pay. employee has been employed for up to two
years, to eight weeks’ notice, applicable where
4.4 Termination of Employment an employee has been employed for 15 years
Contracts and upwards. Employees, on the other hand, are
An employer can, under common law, terminate only obliged to give notice of one week, irrespec-
an employment contract without cause, provided tive of their length of service. These are, how-
this is done in accordance with the terms of the ever, only the minimum periods. A contract of
contract. Notwithstanding any express contrac- employment may specify a longer notice period
tual right to terminate, employees are afforded on either side, and it generally does, with notice
statutory protection against unfair or discrimina- periods typically ranging from one to six months
tory dismissal. Under the Unfair Dismissals Acts depending on the seniority of the role. There is
1977–2015 (UDA), an employer cannot lawfully no requirement to pay an employee severance
dismiss an employee unless substantial grounds in the event of a dismissal, unless it arises by
exist to justify termination. Also, it is essential reason of redundancy.
for an employer to be able to establish that fair
procedures have been followed before making PEA procedures
a decision to dismiss. Subject to certain excep- The Protection of Employment Acts 1977 to
tions, employees must have at least 12 months’ 2015 (PEA) prescribes the procedures to be fol-
continuous service to qualify for protection lowed in a collective redundancy. Employers
under the UDA. are obliged to initiate consultation at the ear-
liest opportunity, and in any event at least 30
Generally, a dismissal will only be justified if it is days before the first notice of dismissal is given.
based on one of the following grounds: Where an employer effects collective redundan-
cies, the employer must, with a view to reaching
• the capability, competence or qualifications of agreement, initiate consultations with employee
the employee for the work concerned; representatives in relation to matters such as
• the conduct of the employee; the possibility of avoiding or reducing the pro-
• the redundancy of the employee; or posed redundancies and the basis on which it
8IRELAND Law and Practice
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
will be decided which particular employees will Information and Consultation Representation
be made redundant. In addition to any local representation arrange-
ments that may exist (whether with trade unions
The PEA requires employers to provide employ- or otherwise), employees may also be entitled
ee representatives and the Minister for Employ- to representation in certain circumstances as
ment Affairs and Social Protection with certain a matter of statute. This form of representation
written information such as the proposed num- can arise in transfer of undertakings, collective
ber of redundancies, and a description of the redundancy situations or where the employees
employees it proposes to make redundant. The are covered by a local or European-level works
minister must also be notified of the proposals council.
at least 30 days in advance of the first notice of
redundancy being given. The Transnational Information and Consultation
of Employees Act 1996 (as amended) (the “1996
Statutory redundancy pay Act”), requires undertakings with at least 1,000
Statutory redundancy pay is currently two employees in the EU and 150 or more employees
weeks’ pay for each year of service, plus one in each of at least two member states to set up
extra week’s pay. A week’s pay for these purpos- European works councils to inform and consult
es is currently subject to a ceiling of EUR600 a with their employees on a range of management
week. For both ordinary dismissals and collective issues relating to transnational developments
redundancies, it is commonplace for employers within the organisation. Under the 1996 Act, a
to offer employees an ex gratia payment upon special negotiating body (SNB) is established to
termination of employment in exchange for the negotiate with the employer. The duration and
employees signing a compromise agreement functions of the SNB will be subject to the terms
that waives all employment law claims against and purpose of the works council agreement put
the employer. in place.
4.5 Employee Representations The Employees (Provision of Information and
The concept of employee representation under Consultation) Act 2006 obliges employers with
Irish law relates to both unionised and non- at least 50 employees to enter into a written
unionised employees, and is derived from a agreement with employees or their elected rep-
number of sources, both statutory and other- resentatives setting down formal procedures for
wise. informing and consulting with them. The legis-
lation will only apply if a prescribed minimum
Trade Union Representation number of employees request it. The legislation
Any employee has the right to join a trade union, is silent on how employee representatives are
although trade unions may not legally compel elected, and it will be up to the employees to
employers to recognise and negotiate with them. determine how this is conducted, but usually it
The degree to which trade unions may embark is done by way of secret ballot.
upon industrial action is regulated principally
by the Industrial Relations Act 1990. Employee
representatives are appointed by way of secret
ballot.
9Law and Practice IRELAND
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
5 . TA X L A W is generally subject to PRSI and payments are
generally collected by the employer through the
5.1 Taxes Applicable to Employees/ PAYE system. The amount of PRSI paid by an
Employers employee depends on the employee’s income
The primary Irish taxes applicable to employees and the PRSI class of the employee.
and employers in the context of an employment
relationship are income tax, pay-related social The most common PRSI class for private sector
insurance (PRSI) and the universal social charge employees in Ireland is Class A (employees in
(USC). industrial, commercial and service type employ-
ment with gross earnings of EUR38 or more in a
Income Tax week). A Class A employee’s PRSI contribution
Irish tax law generally imposes income tax on an will generally be 4% of all “reckonable earnings”
individual where they are resident or ordinarily (which includes employee share-based remu-
resident in Ireland in the year of assessment or neration and any benefit in kind). Separately, the
if employment is exercised in Ireland in the year employer must also make an employer’s PRSI
of assessment. contribution of 8.8% on weekly earnings up to
EUR398 and 11.05% on weekly earnings over
An individual will be considered resident in Ire- EUR398.
land in a year of assessment if they are present
in Ireland for at least either 183 days in the year USC
of assessment or 280 days in the year of assess- Employees in Ireland are also subject to a fur-
ment and the preceding year when taken togeth- ther tax payable on total income, known as USC.
er (provided that the individual has been present For 2021, the first EUR12,012 of an individual’s
for at least 30 days in each of these two years). aggregate annual income will be taxed at a rate
An individual will be regarded as ordinarily resi- of 0.5%, the following EUR8,675 at 2%, the
dent in Ireland for tax purposes if the person following EUR49,357 at 4.5% and the remain-
has been resident in Ireland for three consecu- ing balance at 8%. There is also an additional
tive years immediately preceding the year of surcharge of 3% applied to individuals whose
assessment. non-employment-related income exceeds
EUR100,000 in a year.
Different income tax rate bands apply depend-
ing on an employee’s personal circumstances. COVID-19 Support Schemes
The current standard rate of income tax is 20%, As part of measures to provide financial support
which applies to the first EUR35,300 per year to employers affected by the challenges of doing
earned by a single person without children and business during COVID-19, a Temporary Wage
to the first EUR44,300 per year earned by a mar- Subsidy Scheme was introduced in 2020 which
ried person or a person in a civil partnership. ran until 31 August 2020 and was subsequently
A higher 40% rate is applied to any remaining replaced by the Employment Wage Subsidy
balance. Scheme (EWSS), which has been extended to
31 December 2021.
PRSI
PRSI is Ireland’s equivalent of social insurance or The EWSS enables employers affected by the
social security contributions. Subject to certain pandemic to receive significant support. The
limited exceptions, anyone employed in Ireland scheme is available to employers that possess
10IRELAND Law and Practice
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
valid tax clearance, keep employees on the pay- Irish Revenue has published helpful guidance
roll through the COVID-19 pandemic and that to address certain challenges of doing business
have suffered a minimum decline of 30% turno- during COVID-19, including the implications for
ver due to COVID-19. In addition, the scheme the tax residence position of an Irish-resident
allows employers to charge a reduced rate of company where employees, directors, service
employer’s PRSI of 0.5% on wage payments providers or agents are unable to travel as a
that are eligible for EWSS. result of COVID-19-related travel restrictions. For
example, where an individual director is unable
Employees and self-employed people who have to travel to Ireland to attend the board meetings
lost their employment due to COVID-19 may of an Irish-resident company, Revenue will not
apply for the COVID-19 Pandemic Unemploy- view this as impacting the Irish tax residence
ment Payment, which is a form of social welfare status of the company. Businesses should main-
payment. tain a record of the reasons for such presence
in or outside of Ireland, as Irish Revenue may
5.2 Taxes Applicable to Businesses request evidence that such presence resulted
The primary Irish taxes applicable to businesses from COVID-19-related travel restrictions.
are corporation tax on income and chargeable
gains, value added tax (VAT), withholding tax and The rate of corporation tax payable on a com-
stamp duty. pany’s profits will depend on whether the profits
arise from trading (broadly, operational activities)
Corporation Tax or non-trading (eg, passive investment) activities.
A company that is resident in Ireland for Irish A low rate of 12.5% applies to trading profits,
tax purposes will be subject to corporation tax with a 25% rate applying to non-trading income.
on its worldwide profits and gains regardless of The question of whether a company is carrying
where those profits arise. A company that is not on a trade is primarily one of fact to be decided
tax resident in Ireland is liable to corporation tax on a case-by-case basis, though Irish Revenue
in Ireland if it carries on a trade in Ireland through is willing to provide an opinion as to whether a
a branch or agency. A non-Irish company may particular activity constitutes the carrying on of
also be subject to corporation tax on gains real- a trade in certain circumstances.
ised on the disposal of Irish-situated assets used
for such a trade carried on in Ireland or realised Losses incurred by a company in respect of trad-
on the disposal of certain specified Irish assets, ing operations can generally be carried forward
including Irish land or buildings or shares in a indefinitely for use against future profits of that
company that derive the greater part of their trade. Losses can also be surrendered to other
value from Irish land or buildings. companies within a group for Irish corporation
tax purposes.
A company will generally be considered tax
resident in Ireland if it is centrally managed and Chargeable Gains
controlled in Ireland, regardless of where the Chargeable gains realised by an Irish tax-res-
company is incorporated. If a company is incor- ident company on the disposal of a capital
porated in Ireland, the general rule is that the asset are generally subject to corporation tax
company will be Irish tax resident unless it is tax at an effective rate of 33%. A non-Irish resident
resident in another country pursuant to the terms company will be subject to corporation tax in a
of a double-tax treaty. similar manner on gains realised on the disposal
11Law and Practice IRELAND
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
of specified Irish assets (broadly, Irish land and Stamp Duty
buildings or shares deriving their value from such Irish stamp duty applies to certain documents
assets or from Irish branch assets). that transfer property and are either executed
in Ireland, relate to property situated in Ireland
VAT (such as Irish real estate or shares in Irish com-
Supplies and receipts of goods and services in panies), or relate to a matter or thing done or to
Ireland are generally subject to VAT. The stand- be done in Ireland.
ard rate of VAT in Ireland is 23%. Reduced rates
ranging from 0% to 13.5% may apply to sup- That noted, there are various exemptions and
plies or receipts of certain specified goods and reliefs from Irish stamp duty, including an
services, and full exemptions apply to certain exemption for transfers of certain IP rights and
goods or services. A business that is engaged broad reliefs for intra-group transfers and for
in an activity to which VAT applies on its sup- group reorganisations and mergers. Where an
plies should typically be entitled to recover the exemption is not available, a stamp duty rate of
VAT it incurs on purchases, subject to certain 1% generally applies to transfers of shares and
exceptions. a rate of 7.5% generally applies to transfers of
commercial property.
The obligation to account for VAT on supplies
made by a company may arise for either the sup- 5.3 Available Tax Credits/Incentives
plier or the customer, depending on the relevant There are a number of tax credits and incen-
circumstances, such as whether the supply tives available in Ireland, including research and
involves a cross-border element. Businesses are development tax credits and capital allowances
generally obliged to register for VAT in Ireland. for capital expenditure incurred to acquire cer-
tain intellectual property. Recently, a number of
Certain temporary VAT reliefs are currently in new incentives have been introduced to address
place due to COVID-19, including a conces- the business impact of COVID-19.
sional application of the zero rating for the
supply of COVID-19 vaccines, testing kits and Research and Development Tax Credit
related services, and relief from import duties for Irish tax legislation provides for a tax credit in
goods imported from outside the EU to combat respect of certain expenditure on research and
COVID-19. development activities, buildings and plant and
machinery. Credit is available for 25% of the
Withholding Tax allowable expenditure (in addition to a general
Ireland imposes withholding tax on payments tax deduction at 12.5%).
of distributions and dividends by Irish-resident
companies at a rate of 25%, and on payments of A number of conditions must be satisfied in order
interest, patent royalties and certain annual pay- for the credit to be available, including a require-
ments at a rate of 20%. However, there are broad ment that the research and development seeks
exemptions from these withholding requirements to achieve scientific or technological advance-
such that withholding will generally not arise on ment and involves the resolution of scientific or
payments made to persons resident in another technological uncertainty.
EU member state or in a jurisdiction with which
Ireland has agreed a double tax treaty. Excess credits can be repaid to companies in
instalments and during the current COVID-19
12IRELAND Law and Practice
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
crisis, Irish Revenue is willing to accelerate tions and are currently expected to continue until
instalments due to be repaid in 2021. 31 December 2021. An enhanced restart pay-
ment has also been introduced for businesses
Capital Allowances Regime for Capital availing of CRSS who can re-open from 2 June
Expenditure on the Provision of Certain 2021 pursuant to which their EUR5,000 payment
Intellectual Property per week will be increased to EUR10,000 for the
A special capital allowances (tax deprecia- first three weeks of re-opening.
tion) regime is available for capital expenditure
incurred to acquire certain categories of intel- As a further support to businesses, the govern-
lectual property (known as “specified intangible ment has announced the introduction of the
assets”) for the purposes of a company’s trade. Business Resumption Support Scheme (BRSS)
Specified intangible assets for these purposes for vulnerable but viable businesses that were
include patents, trade marks, brands, copyrights significantly impacted throughout the pandemic,
or computer software, among other categories even after restrictions were eased.
of IP.
In addition, a debt warehousing scheme has
Capital allowances on qualifying expenditure been introduced to assist businesses that are
may either be claimed in accordance with amor- struggling to make payments of taxes as a result
tisation charged to the profit-and-loss account of the COVID-19 impact. This scheme allows
of the company or alternatively, on a straight- unpaid VAT and PAYE debts resulting from the
line basis over 15 years at the rate of 7% for the pandemic to be “parked” for a period of 12
first 14 years and 2% in the final year. Capital months after a business resumes trading. Fur-
allowances are available to offset taxable prof- thermore, after the expiry of this 12-month peri-
its earned from the specified intangible assets od, employers can repay their warehoused debts
subject to an 80% cap. at a reduced interest rate of 3% per annum.
Revenue will expect a robust valuation report to 5.4 Tax Consolidation
support the arm’s length nature of the capital Tax consolidation is not available under Irish
expenditure, and taxpayers must maintain docu- tax law and a company subject to corporation
mentation and records used in the preparation tax must prepare and file its own tax return for
of the intellectual property valuation. corporation tax purposes for each assessment
period. However, Irish tax law does provide for
COVID-19 Related Supports group relief, which permits companies within
A COVID-19 Restrictions Support Scheme the same corporate group to surrender certain
(CRSS) was recently introduced to support losses to other profitable group companies.
businesses required to prohibit or restrict cus-
tomer access to their premises during COVID-19 5.5 Thin Capitalisation Rules and Other
restrictions. Such businesses can apply to Irish Limitations
Revenue for a payment known as an “Advance Ireland does not have any specific thin capitali-
Credit for Trading Expenses” (ACTE) based on sation rules, but there are a number of circum-
a proportion of average weekly turnover with stances where interest payments may be con-
a maximum payment of EUR5,000 per week. sidered to be non-deductible in calculating the
These ACTE payments are payable for each taxable profits of a company.
week that a business is affected by the restric-
13Law and Practice IRELAND
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
For instance, interest paid by a company may be two Irish residents) in addition to trading trans-
re-characterised as a non-deductible distribu- actions. Furthermore, the Irish transfer pricing
tion where interest is paid in respect of securities rules can now also apply to capital transactions
that are convertible into shares, where interest is where the market value of the asset exceeds
dependent on the company’s results, or where it EUR25 million.
represents more than a reasonable commercial
rate. 5.7 Anti-evasion Rules
Ireland has strict anti-evasion rules that impose
Ireland introduced anti-hybrid rules from 1 Janu- criminal sanctions on those who fraudulently
ary 2020, in accordance with the EU Anti-Tax evade tax and on anyone who facilitates such
Avoidance Directive (ATAD), which can deny tax evasion. Anyone found guilty of an offence may
deductions in respect of certain arrangements be fined and/or imprisoned.
between associated enterprises, giving rise to
tax mismatches as a result of hybrid instruments Anti-avoidance Rule
or entities. Ireland also has a general anti-avoidance rule
that applies in respect of tax-avoidance trans-
Ireland will also implement new interest limitation actions. Broadly, a tax-avoidance transaction
rules in accordance with the EU ATAD follow- in this context is a transaction which gives rise
ing a consultation process during 2021. These to a tax advantage and which was undertaken
rules will take effect from 1 January 2022 and, primarily to claim a tax advantage and not for
once introduced, deductions for interest will bona fide commercial reasons. In such cases,
be capped at 30% of earnings before interest, Revenue may deny or withdraw the relevant tax
taxes, depreciation and amortisation (EBITDA). advantage. In determining if a transaction is a
tax-avoidance transaction, regard will be given
5.6 Transfer Pricing to:
Irish transfer pricing rules apply the arm’s length
principle to trading transactions between asso- • the form of the transaction;
ciated enterprises. In this context, “arm’s length” • the substance of the transaction and any oth-
is to be construed in accordance with OECD er transaction(s) directly or indirectly related
guidelines. The Irish transfer pricing rules were to or connected with that transaction; and
significantly amended from 1 January 2020 to • the final outcome of the transaction and any
align with the 2017 OECD guidelines. related transaction.
Broadly, Ireland’s transfer pricing rules require As such, genuine commercial arrangements
that if the actual consideration payable or con- undertaken with a view to making a profit should
sideration receivable by a trader in a transac- not be subject to the general anti-avoidance rule.
tion with an associated enterprise is other than
at arm’s length, then any understatement in the Exit Charge
trader’s profit will be reversed so that the full Ireland recently introduced an ATAD-compliant
arm’s length profit of the trader will be taxed. exit tax. The exit tax is charged at a rate of
12.5% and applies to unrealised capital gains
The Irish rules were updated from 1 January inherent in assets where:
2020 to apply to non-trading transactions (save
for certain non-trading transactions between
14IRELAND Law and Practice
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
• a company migrates its place of residence corporate legal entity, involves the acquisition
from Ireland to any other jurisdiction; or of assets that constitute a business to which
• assets or a business of an Irish permanent a turnover can be attributed (here, “assets”
establishment (PE) are allocated from the PE include goodwill).
back to its head office or to a PE in another
jurisdiction (this limb of the charge only Turnover Thresholds
applies in respect of companies that are Mergers and acquisitions that meet the turnover
resident in an EU member state other than thresholds set out in Section 18(1) of the Act are
Ireland). subject to mandatory notification to the CCPC,
where, for the most recent financial year:
The exit charge does not apply to assets that
remain within the Irish tax charge. A higher 33% • the aggregate turnover within Ireland of the
exit charge can apply where the transaction undertakings involved is not less than EUR60
forms part of an arrangement to subsequently million; and
dispose of the relevant assets. • the turnover within Ireland of each of two or
more of the undertakings involved is not less
Where the relevant company/assets have been than EUR10 million.
migrated to an EU/EEA country, the exit charge
may be deferred and, in such circumstances, is Where these requirements are not met, mergers
payable in instalments over five years. If the exit may still be notified to the CCPC on a volun-
charge is unpaid, Revenue may pursue any other tary basis under Section 18(3) of the Act. The
Irish-resident group company or a director who CCPC can also investigate mergers falling below
has a controlling interest in the company that is the turnover thresholds, where they believe the
subject to the charge. merger could have as its object or effect the pre-
vention, restriction or distortion of competition,
or involves the creation or strengthening of a
6. COMPETITION LAW dominant position.
6.1 Merger Control Notification Joint Ventures
The Irish merger control regime applies to “any Only full-function joint ventures (ie, those which
merger or acquisition”, which is defined by Sec- perform, on a lasting basis, all the functions of an
tion 16(1) of the Competition Acts 2002 to 2017 autonomous economic entity) constitute a merg-
(the “Act”), as amended, as including transac- er for the purposes of the Irish merger control
tions where: regime. The CCPC, which is primarily responsi-
ble for the enforcement of the Irish merger con-
• two or more undertakings, previously inde- trol regime, adopts an approach mostly consist-
pendent of one another, merge; ent with the European Commission in identifying
• one or more individuals who already control whether joint ventures are subject to Irish merger
one or more undertakings, or one or more control law.
undertakings, acquire direct or indirect con-
trol of the whole or part of one or more other Where a joint venture does not qualify as full-
undertakings; or function, the CCPC may assess it under Section
• the acquisition of part of an undertaking, 4 of the Act, which is based on Article 101 of the
although not involving the acquisition of a Treaty on the Functioning of the European Union
15Law and Practice IRELAND
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
(TFEU). Typically, the CCPC will have regard to on the merging parties putting a merger that has
the European Commission’s Guidelines on Hori- been notified (both mandatorily and voluntarily)
zontal Cooperation Agreements and the Guide- into effect prior to the issue of a clearance deter-
lines on Vertical Restraints when undertaking mination.
such an assessment.
Under Sections 18(9) and 18(10) of the Act, fail-
6.2 Merger Control Procedure ure to notify a merger that meets the turnover
A filing must be submitted to the CCPC prior thresholds is a criminal offence punishable by
to the implementation of the merger, and may fines of up to EUR250,000, plus EUR25,000 per
be made as long as the undertakings involved day for a continued breach. The CCPC cannot
demonstrate a good-faith intention to conclude impose administrative fines but must refer the
an agreement. matter to the Director for Public Prosecutions to
initiate either summary prosecution or prosecu-
Phase I tion on indictment.
A Phase I clearance determination must be
issued by the CCPC within 30 working days of 6.3 Cartels
the “appropriate date”, which means the date Anti-competitive agreements and practices are
on which a full and complete filing by the merg- prohibited under Section 4 of the Act, which is
ing parties is made, unless either the CCPC has based on Article 101 of the TFEU. Section 4 pro-
used its power to “stop and restart the clock” hibits agreements, decisions and/or concerted
by issuing a formal requirement for information practices that have as their object or effect the
(RFI), which has the effect of resetting the clock prevention, restriction or distortion of competi-
and only restarting it when the RFI is complied tion in trade in any goods or services in Ireland
with, or when the parties and the CCPC com- or in any part of Ireland. The Act applies to busi-
mence negotiating remedies, in which case, nesses operating in Ireland and international
the Phase I period is extended to 45 working business where an agreement is found to restrict
days. The CCPC also issues “informal” requests competition in Ireland.
for information that do not stop and restart the
clock. Section 4 sets out a non-exhaustive list of agree-
ments that are prohibited, such as those that:
Phase II
A Phase II clearance determination must be • directly or indirectly fix purchase or selling
issued by the CCPC within 120 working days prices or any other trading conditions;
of the appropriate date. If the CCPC issues a • limit or control production, markets, technical
formal RFI in the first 30 working days of the development or investment;
Phase II period, this has the effect of stopping • share markets or sources of supply;
and restarting the clock in the same way as at • apply dissimilar conditions to equivalent
Phase I. If the parties and the CCPC are negoti- transactions with other trading partners
ating remedies, the Phase II period is extended (thereby placing them at a competitive disad-
to 135 working days. vantage); and
• make the conclusion of contracts subject to
Obligations and Failure to Notify acceptance by other parties of supplementary
A suspensory obligation is included in the Act. obligations that have no connection with the
Section 19(1) of the Act imposes a prohibition subject matter of the contracts.
16IRELAND Law and Practice
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
Section 6 of the Act makes it a criminal offence of a dominant position. The remedies available
to enter into or implement an agreement, deci- in civil proceedings include a court declaration,
sion or concerted practice that is prohibited damages, imposing structural measures and an
under Section 4. The CCPC operates a Cartel injunction.
Immunity Programme with the Director of Pub-
lic Prosecutions which provides for the possi-
bility of immunity from prosecution for the first 7. INTELLECTUAL
company/business to come forward to report a PROPERTY
cartel.
7.1 Patents
6.4 Abuse of Dominant Position Definition
Abuse of a dominant position is prohibited by Any inventive product/process is patentable
Section 5 of the Act and Article 102 of the TFEU. under Irish law if it:
Section 5 of the Act mirrors Article 102 of the
TFEU, except that Section 5 refers to abuse of a • is susceptible to industrial application;
dominant position in trade for any goods or ser- • is new; and
vices in Ireland or in any part of Ireland. While the • involves an inventive step.
Act refers to trade in goods and services in the
state, the provisions of the Act are also likely to Certain inventions are specifically excluded
apply to international businesses/trade that are/ under Irish law, including a discovery or scien-
is found to be in a dominant position and where tific theory, computer programs and methods of
there is an effect on trade in Ireland. doing business.
Definition of Dominance Length of Protection
There is no definition of dominance within the Patent protection lasts for up to 20 years from
Act. The Irish courts and the CCPC have adopt- the date of the application, subject to the pay-
ed the definition formulated by the CJEU in case ment of renewal fees. Irish law also provides for
27/76, United Brands v Commission [1978] ECR the extension of full-term patents for pharma-
207: “[a] position of economic strength enjoyed ceuticals for human or animal use for up to five
by an undertaking which enables it to prevent years.
effective competition being maintained on the
relevant market by affording it the power to Irish law also provides for short-term patents
behave to an appreciable extent independently which have a ten-year duration. The test of
of its competitors, customers and ultimately of inventiveness for a short-term patent is lower
its consumers”. than for a full-term patent. Short-term patents
may be converted to a full-term patent where
Remedies they meet the requirements for a full-term pat-
As in the case of cartels, the Act makes abuse ent.
of a dominant position a criminal offence that
can be prosecuted before the Irish courts and is Registration
punishable by financial penalties. The Act also Applications for Irish patents are filed at the
includes specific provision for aggrieved persons Intellectual Property Office of Ireland (IPOI). The
and the CCPC to take civil proceedings before specification forming part of the application must
the Irish courts seeking remedies for an abuse include the title of the invention, the description
17Law and Practice IRELAND
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
of the invention and the claim or claims and manner similar to that applying in other common
drawings, if any, referred to in the description. law jurisdictions.
It is also possible to file a patent application Length of Protection
at the European Patent Office (EPO) under the Registered trade marks (be they national Irish
European Patent Convention (EPC) or at the marks, Madrid Protocol marks or EU trade marks)
World Intellectual Property Organisation (WIPO) are registered initially for a ten-year period but,
under the Patent Cooperation Treaty (PCT) and uniquely among intellectual property rights, this
to designate Ireland for patent protection. The term can be renewed indefinitely for successive
EPC and the PCT both facilitate the application ten-year terms on payment of a renewal fee.
for patents in a number of jurisdictions, but these
are effectively a bundle of applications to a num- A trade mark registration will only remain valid
ber of states. to the extent that the mark is used by the owner
in respect of the goods/services for which it was
Enforcement and Remedies registered.
Patents in Ireland are enforced through civil
claims against infringing parties. A patent owner Registration
can prevent direct or indirect use of their inven- There are three options open to trade mark pro-
tion by third parties in Ireland without their con- prietors carrying on business in Ireland.
sent.
An application for an Irish trade mark at the
The courts have a wide range of civil remedies IPOI
available to them to compensate aggrieved own- An IPOI examiner scrutinises the application to
ers. These include a declaration of the validity of ensure that it can be considered a trade mark
a patent and that it has been infringed, damages under Irish law and generally examines the
for infringement, injunctive relief and orders to application to see if its use would infringe pre-
account for profits; and to seize, destroy and/or existing Irish/EU trade marks, or otherwise falls
hand over infringing goods to the patent holder. within a prohibited form of trade mark. If satis-
fied with the application, the IPOI publishes it in
7.2 Trade Marks the Official Journal. Third parties then have three
Definition months within which to oppose the application
A trade mark under Irish law is any sign capable by filing a Notice of Opposition.
of both:
If there is no opposition, the application will pro-
• being represented graphically; and ceed to registration on payment of the registra-
• distinguishing the goods or services of one tion fee.
undertaking from those of other undertakings.
An application for a European Union trade
A trade mark may consist of words (including mark at the European Union Intellectual
personal names), designs, letters, numerals or Property Office (EUIPO)
the shape of goods or of their packaging. EU trade marks are filed with EUIPO and under-
go an examination, publication and opposition
Unregistered trade marks have a limited protec- procedure prior to registration, similar to that
tion in Ireland through the law of passing off, in a described for Irish trade marks above. An EU
18IRELAND Law and Practice
Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Shane Hogan, Kate McKenna and Anne-Marie Bohan,
Matheson
trade mark is a unitary European-wide property tomers that is calculated to injure the business
right and protects the trade mark proprietor in all or goodwill of the plaintiff and that causes, or is
member states of the EU. likely to cause, the plaintiff damage.
An international application designating 7.3 Industrial Design
certain states, including Ireland, under the Definition
Madrid Protocol Under Irish law, a “design” is defined as the
On request, the IPOI will forward a trade mark appearance of the whole or a part of a prod-
application or registration to the International uct resulting from the features of a product or
Bureau of the WIPO in Geneva. The Irish trade its ornamentation, including the lines, contours,
mark application or registration serves as a base colour, shape, texture or materials of the prod-
on which the proprietor may designate the mark uct itself or its ornamentation. In order to be
for registration in other Madrid Protocol coun- registerable, a design must be “new” and have
tries, for example, the United Kingdom and the “individual character”. Unregistered designs are
United States. The International Bureau notifies also granted a level of protection under Irish law.
the trade mark offices designated in the inter-
national filing, which, in turn, decide whether to Length of Protection
accept the application for registration in their The total term of protection for designs under
territory. Irish law is 25 years, renewable at five-year inter-
vals.
A Madrid Protocol filing can be a cost-effective
and efficient way to obtain trade mark protection An unregistered design exists for a period of
in multiple jurisdictions. three years from the date the design is first
made available to the public within the EU where
Enforcement and Remedies the disclosure could reasonably have become
An infringement will occur where a mark, which known to those in the sector concerned, operat-
is the same or similar to a registered mark, is ing within the EU.
used in relation to the same or similar goods
or services as the registered mark. Where the Registration
mark being used by a third party is not identical Designs are registered with the IPOI. An applica-
to the registered trade mark, a proprietor needs tion for a Registered Community Design is made
to show that there is a likelihood of confusion on with the EUIPO.
the part of the public.
Enforcement and Remedies
The reliefs available for trade mark infringement The reliefs available for industrial design infringe-
include damages, an injunction and orders for an ment include damages, injunctions and orders
account of profits, or the destruction or deliver- for an account of profits.
ing up of infringing goods.
An unregistered design does not confer a
An unregistered trade mark can be enforced monopoly, unlike a registered design, and
through the vehicle of “passing off”. To succeed infringement can take place only if copying can
in an action for passing-off, the plaintiff must be established.
show that the defendant makes a misrepresen-
tation in the course of trade to prospective cus-
19You can also read
